Thousands of workers at MG Rover will be made redundant this weekend after the British motor industry suffered its blackest day when slim hopes of saving the country's last volume carmaker collapsed.

The huge Longbridge plant in Birmingham will be mothballed and the 400 acre site will probably be redeveloped, smashing up 100 years of history and the job prospects of generations of people across the West Midlands.

Hopes of saving the firm hung by a thread for the past week, but it was severed today when the Shanghai Automotive Industry Corporation (SAIC) told the UK Government it did not want to buy any part of MG Rover.

Tony Woodley, general secretary of the Transport and General Workers Union, said his worst fears had been realised. Many workers now faced a lifetime on the dole.

"This is the darkest day in the history of the British car industry," he said.

Prime Minister Tony Blair abandoned his General Election campaign to travel to Birmingham, accompanied by Chancellor Gordon Brown and Trade and Industry Secretary Patricia Hewitt, to announce a #150 million support package to help workers retrain or find other jobs.

Following talks with the Rover task force, Mr Blair said he wanted to express his "real sorrow" for the workforce at Longbridge and their families.

"This is a desperate time for the workers at Longbridge and their families," he said.

The support package will be made up of #60 million to help diversify industry in the area and to support the supply chain.

There will be another #50 million to fund the retraining and re-skilling of workers made redundant and a further #40 million will be ploughed into statutory redundancy payments.

The Chancellor said that around #40 million of previously announced money will help with construction of a new industrial park in the region and the Government will discuss the prospect of additional help with the European Union.

Pension protection arrangements will come into play and the Prime Minister assured workers that the Government was examining the question of Rover cars bought by the company's employees, in some cases involving finance deals.

Workers have expressed concern that they will be left owing thousands of pounds for cars they have bought through MG Rover which would more than wipe out their redundancy pay.

Mr Brown said every Longbridge worker will be interviewed over the next week to be told about opportunities for retraining. They will be given details of the 26,000 job vacancies in the West Midlands.

Conservative leader Michael Howard welcomed the support package.

"We support the decision in principle and recognise the need to help all those affected, not just those directly employed at MG Rover, but those in the dealerships and the component suppliers," he said in a statement.

"Of course, if we were in Government, we would want to look at the details of this package. It is important that we do everything we can to help."

Sir Digby Jones, director general of the Confederation of British Industry, said tonight that firms had been ringing him all day saying they were crying out for skilled workers.

"Although this is a very sad day, I firmly believe it will be a day or rebirth rather than one of death."

Sir Digby launched a fresh attack on the four directors of Phoenix Venture Holdings (PVH), who bought MG Rover from German car giant BMW for a nominal #10 in 2000 and who have come under attack for paying themselves millions of pounds in wages and pensions.

"They should look at their consciences. It does nothing to help the argument we have been pressing about directors not being rewarded for failure."

The end of the road for Rover came quickly after a tortuous week of clinging to hopes that a partnership deal with SAIC could be revived, even though all the signs from China were negative.

Ian Powell, joint administrator at PricewaterhouseCoopers (PwC) said: "In light of this important development we have concluded that there is no realistic prospect of obtaining sufficient further finance to retain the workforce while the position with other parties is explored.

"As we indicated earlier in the week significant redundancies will now be effected. We are extremely disappointed that SAIC has decided not to progress discussions to acquire the business. We are very conscious of the impact this news will have on the employees, their families and the businesses dependent on MG Rover Group."

Tony Lomas, joint administrator at PwC, said: "We have worked closely with the unions, Government, employees and directors to understand the position and the options for the business.

"It was apparent that very significant funding would be required to sustain the business as a going concern and that a sale of the complete business would be extremely complex and would take a long time to conclude.

"In addition to exploring the interests of SAIC we have received a number of other inquiries. In our view, none of these is capable of resulting in a sale of the complete business.

"During the course of this week we have made every effort to establish SAIC's intentions. We have had regular contact with SAIC's advisers and had established direct contact with the company.

"SAIC has now stated its intentions and unfortunately does not wish to acquire the business."

Within minutes of the announcement workers left the Longbridge plant clutching tool boxes and other personal belongings.

Mr Woodley said: "The one in a million chance we felt our people had has now been taken away. We have worked hard this week with the administrators to develop a sound business plan to present to SAIC. But it does take two to talk and that opportunity has now gone."

Ms Hewitt said it was "devastating news" for the MG Rover workers and their families.

"Over the last week the unions and Government have done everything possible to try and secure Longbridge's future as a going concern.

"The challenge is now for all of us to work together to support the workforce and their families and to take the steps that are needed to secure jobs and economic strength in the West Midlands economy."

Ms Hewitt said the Government had hoped to give the car firm a "breathing space" to secure the investment needed for new models needed to keep the Longbridge plant going.

She added: "It's that hope of new models, new investment and the continuation of Longbridge as a going concern which has now, I'm afraid, died with the Chinese saying no."

Ms Hewitt telephoned the home of one of the women who led a protest to Downing Street earlier this week to express her sympathy.

The minister spoke to the Phil Hanks, who has worked in the paint shop at Longbridge for the past 15 years.

"I don't blame the Government for what has happened because they have done all they can.

"We were still holding out some hope that the deal would go ahead, so this is the worst possible news."

Mr Hanks said he was "disgusted" with John Towers and his fellow directors, adding: "How they can treat working people like this and just walk away with millions of pounds is beyond me.

"They won't be having any sleepless nights about how they will pay the bills."

Andrew Cartwright, who has also worked in the paintshop for 15 years, said hope had turned to anger against Mr Towers and the other directors.

"They have walked away with the money. They have houses abroad while we won't have money to put dinner on the table.

"If I was John Towers I would put some of my millions towards the workers' redundancy."

Paul Kenny, acting general secretary of the GMB, said: "This is an absolute disaster, a dreadful day for the country. The knock-on effect among suppliers will be horrendous.

"We desperately need a strategy to help private sector manufacturing."

The administrators said 600 Longbridge staff would help to complete about 1,000 half-made cars.

About 400 staff would be retained at the company's Powertrain engine plant and 25 at MG Sport and Racing.

Mr Powell told a press conference at Longbridge that a "definitive letter" had been received from SAIC explaining that they did not want to progress with the acquisition of MG Rover, or its engine making company Powertrain.

"We analysed the letter as quickly as we could. We consulted with the relevant parties but on the basis of the letter we decided it was inappropriate for us to seek any further funding.

"We don't believe having read the letter there remains a prospect of a going-concern sale of the business to SAIC."